Hoffman Estates ponders offering insurance for water lines

Hoffman Estates trustees are scrutinizing a proposal to offer residents a form of insurance for clogged water pipes and other sewage line problems.

The deal could be lucrative for New Jersey-based American Water, which wants to provide the insurance. Trustee Cary Collins crunched the numbers, and if American Water signed up the village's approximately 15,000 residential water customers, it would net about $1.8 million per year for the water company.

But board members were skeptical about the idea and how the village would benefit from it.

Director of Public Works Kenneth Hari said American Water sent marketing materials to Hoffman Estates a few years ago wanting to expand its operation. Monday, a company representative was on hand to present the concept to the village board.

Generally speaking, homeowners are responsible for covering any water or sewer lines repairs within the footprint of their properties. The American Water plan would provide coverage for those types of repairs.

Village officials want to ensure residents that they're not looking at this as a way to save money by passing along any costs to taxpayers that otherwise would be the village's responsibility. It would merely be a way to offer residents protection against potentially costly repairs.

But trustees weren't very receptive to the idea, because part of the pitch included a partnership with the village that included placing the Hoffman Estates logo on American Water's promotional materials.

"Residents would naturally expect a higher service level if the village is putting their stamp on this," Hari said.

Trustees also questioned whether the arrangement would increase village liability. Hari said the village would have minimal liability issues, as it already has similar agreements with other contractors. The concern was more a question of ensuring the residents were delivered the services they wanted, Hari said.

The program would be optional for residents through a bimonthly fee that comes out to $132 a year for water and sewer line coverage, and $50 for in-home emergency plumbing services. There's also a $50 service fee per visit. The program covers repairs up to $5,000 for the sewer and water lines, and $3,000 for in-home plumbing repairs. There are coverage limitations, including damage caused by acts of God.

Without the coverage, repairs could cost homeowners between $3,000 to $6,000, depending on where the water line is located, Hari said. Hari said the village sees six to 10 water line repairs per year, most for smaller, spot repairs, versus replacing the entire pipe system.

Hari said there's no timeline at this point for when the proposal might come back for a formal vote.